KUALA LUMPUR: Malaysians should brace for tough times ahead as the economy is facing real problems amid an intractable external situation which is deteriorating on an almost daily basis, warns a prominent economist.
Dr Jomo Kwame Sundaram, a senior adviser at Khazanah Research Institute, said many of these problems were beyond the control of the Malaysian government and the people needed to prepare themselves for hard times ahead.
“The economic war is not about the trade between the United States and China, and we cannot run away as it is also part of our economy,” Jomo said on the sidelines of the Malaysian Economic Convention 2019 here today.
“We are going to be caught in the situation as China is our major trading partner, and there are a lot of Malaysian investments with China as well, as we are tied up in joint ventures such as in Proton and Geely.”
He said it was important for the whole nation to recognise the problem and deal with it together as a country, and to forget about political differences and unite.
The country should also start thinking about domestic investment instead of focusing its efforts on foreign investment as its economic saviour, he said.
Jomo said an economic slowdown was already underway and it was affecting commodity prices.
“We are not a low-cost oil-producing country like Saudi Arabia, but even the Saudis are also revising their policies due to the current economic situation,” he said.
Asked whether the Malaysian economy needed new stimulus, he said the country had been stimulating the economy for the last 20 years since the Asian Financial Crisis with a lot of borrowings, pointing out that there had been “a lot of nonsense going on in the name of stimulus”.
He said the country had to improve itself in terms of accountability and transparency.
On the country’s reform agenda, he said reform was not easy and the wish list was very long, hence the government needed to give priority to urgent problems despite what others, such as the World Bank, tell us to do.
He said it was probably more important to deal with 1Malaysia Development Bhd (1MDB) and the national debt for now.
“I cannot say what the government is doing is wonderful as there is a lot more to be done,” he said.
“But what they are trying to bring about reform is where there is a strong vested interest, who is going to resist reform, therefore it is not easy,” he added. - Bernama